2014 (12) TMI 1143 - HC - Benami Property

Petition for direction to be made for lifting the order of attachment of property or not - Direction to be made for quantification of the stamp duty to be paid - The transfer of the property and registration of the sale deed transferring the title in the property to be allowed or not - Validity of transaction u/s 47 of the Gujarat Value Added Tax Act Held that - There is no explicit provision made under the GVAT Act as is provided under the IInd Schedule of the Income Tax Act, however, it is a well settled law that in the event of any dispute in relation to the title of any property, it is the civil court which shall have a jurisdiction as already held in Tax Recovery Officer v. Gangadhar Viswanath Ranade 1998 (9) TMI 1 - SUPREME COURT - the suit property is a tenement, admeasuring 127.05 square metres, situated at Bhavnagar - The purchase was made by Mrs. Magiya on 29.06.1995 by a registered sale deed - tax dues of Mr. Deepak Magiya have been finalized somewhere in the month of October, 2009. The contention raised by the revenue that Mrs. Jayshreeben Magiya would have no funds of her own, is also not acceptable as she also possibly can have her Stridhan or can own property inherited from her father - the provision of section 3 of the Benami Transactions Act makes it obligatory on the part of the person to prove otherwise when such property is purchased in the name of the wife as legal presumption favours the wife and unmarried daughter - such presumption can be rebutted by the person who alleges by production of evidence or other material before the court, that the property was purchased for the benefit and interest of the person other than the wife and the unmarried daughter - unless the presumption gets rebutted by successfully producing cogent evidence that the suit property was purchased benami by the husband / father for his own benefit, such presumption would continue. The property had been transferred in the name of the present petitioner by way of a registered sale deed on payment of due consideration and, this was done in absence of any charge, registered with the office of the Sub Registrar in respect of the said property - Prima facie, it shall have to be termed as the bona fide purchase of the immovable property for value without notice - in absence of any explicit provision under the GVAT Act and in the wake of the fact that the outstanding dues of Mr. Deepak Magiya, nearly to the tune of ₹ 5 crores, having been finalized somewhere in the year 2009 for the assessment years 2005-06, 2006-07 and 2007-08 - serious question of limitation also would stare in the face of the respondent the Court chooses not to adjudicate on disputed questions of title which shall have to be necessarily decided by the court of law in the civil suit rather than concluding on this aspect in the present petition - the respondents ae allowed to take recourse if permissible under law and for both the parties to argue all these aspects at an appropriate stage before appropriate forum thus, the direction issued by the respondent No.1 to the respondent No.2 for the attachment of the impugned property is set aside - respondent No.2 is also further directed to permit the execution of the sale deed in favour of the proposed purchaser Decided in favour of petitioner.

Issues Involved:
1. Deletion of Respondent No.4.
2. Refusal to execute the final sale deed due to tax dues.
3. Legality of the attachment order under the Gujarat Value Added Tax Act.
4. Applicability of Section 47 and Section 48 of the VAT Act.
5. Benami Transactions and property ownership.
6. Jurisdiction of civil courts in property title disputes.
7. Limitation period for filing a civil suit.

Issue-wise Detailed Analysis:

1. Deletion of Respondent No.4:
Mr. Tushar Hemani, learned advocate for the petitioner, sought permission to delete respondent No.4 from the array of respondents. The permission was granted, and respondent No.4 was deleted from the array of respondents.

2. Refusal to Execute the Final Sale Deed Due to Tax Dues:
The petitioner, who owns the impugned property, entered into an agreement to sell the property to Shri Kamlesh P. Shah. However, the respondent No.2 refused to execute the final sale deed on the grounds that respondent No.1 stated that the husband of the previous owner (respondent No.3) had unpaid tax dues, preventing the transfer of the property. The petitioner communicated with respondent No.2 to provide a copy of the letter/order of attachment and argued that the petitioner was not liable under the VAT Act.

3. Legality of the Attachment Order under the Gujarat Value Added Tax Act:
Respondent No.1 contended that the property transfer was intended to defraud government revenue, making the transaction void under Section 47 of the VAT Act. The respondent argued that the property was sold to the petitioner after a provisional attachment order on the bank account of Shri Deepak Magiya, the husband of the previous owner, was passed. The court noted that Section 47 of the VAT Act deems any transfer made to defraud revenue as void and that Section 48 creates a first charge on the property for tax dues.

4. Applicability of Section 47 and Section 48 of the VAT Act:
The court discussed the similarity between Section 47 of the VAT Act and Section 281 of the Income Tax Act, which also voids transfers made to defraud revenue. The Supreme Court's decision in Tax Recovery Officer v. Gangadhar Viswanath Ranade was referenced, which held that the Tax Recovery Officer cannot declare a transfer void and must file a suit to have the transfer declared void under Section 281.

5. Benami Transactions and Property Ownership:
The court examined the Benami Transactions (Prohibition) Act, 1988, which prohibits benami transactions and provides that property purchased in the name of a wife or unmarried daughter is presumed to be for their benefit unless proven otherwise. The court noted that the State contended that the property was purchased by Deepak Magiya in his wife's name to avoid tax liability. However, the court found this contention unsustainable, as the property was purchased in 1995, and tax dues were finalized in 2009. The court highlighted the severe matrimonial disputes between the parties and the dissolution of their marriage in 2012.

6. Jurisdiction of Civil Courts in Property Title Disputes:
The court emphasized that disputes related to property titles must be decided by civil courts. The court referenced the Supreme Court's decision in Tax Recovery Officer v. Gangadhar Viswanath Ranade, which held that the Tax Recovery Officer must file a suit to declare a transfer void under Section 281 of the Income Tax Act. The court noted that there is no explicit provision under the GVAT Act similar to Schedule II, Rule 11(6) of the Income Tax Act, but civil courts still have jurisdiction over property title disputes.

7. Limitation Period for Filing a Civil Suit:
The court acknowledged the respondents' request to move the civil court to decide the title of the property. The court noted that the outstanding dues of Mr. Deepak Magiya were finalized in 2009, raising a potential issue of limitation for filing a suit. However, the court chose not to conclude on the maintainability of the suit and left the issue open for the parties to argue before the appropriate forum.

Conclusion:
The petition was allowed, quashing the direction issued by respondent No.1 to respondent No.2 for the attachment of the impugned property. Respondent No.2 was directed to permit the execution of the sale deed in favor of the proposed purchaser. The court allowed the respondents to resort to filing a civil suit to decide the title of the property if they desired, with all questions, including the question of limitation, to be decided by the civil court without being influenced by the observations made in this judgment. Rule was made absolute with no order as to costs.

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